“Watching Apple’s (AAPL) share price see-saw over the past three weeks — up to $644, down to $555, up to $618, down to $581 — investors might well wonder whether there’s any limit to how high or, more to the point these days, how low the stock can go,” Philip Elmer-DeWitt reports for Fortune.
“Apple’s revenues grew nearly twice as fast as Amazon’s last year. But Apple’s stock is trading this week at less than 14.3 times earning. If it were trading, as Amazon does, at 190 times earnings, it would selling for more than $7,800 a share,” P.E.D. reports. “But comparing any stock with Amazon buys you nothing but heartache.”
P.E.D. reports, “Bullish Cross’ Andy Zaky point is that there seems to be a limit to how much Apple’s P/E can be compressed. ‘In its recent history, it went to 12.6 only twice,’ he says. ‘During the financial crisis and now. And each time it led to a massive reevaluation.'”
Much more in the full article here.
Wow. Amazon looses about $80 on each of their tablets and Apple makes 25% to 45% on theirs. Anyone think this is screwed up? The real question should be, “Why is Amazon trading at “190 times earnings”? Apple can’t be kept down here long and it will move up again soon.
Maybe take some money out of Amazon and buy some Apple stock while it remains under valued while you still can.
Why indeed is Amazon ( an electronic storefront) trading at 190 times earnings?
Some value…
++1
Indeed, THAT is the question!!!
… one terrible comparison to make. There are any number of less spectacular comparisons that would have made the same point – without the argument. There are also a few other markers: cash on hand, Leading P/E, promising product lines, absolute minimum debt load … all of which bode well for the price of AAPL.
Would that I had more to spend at the moment.
The limit to how low a stock can go is zero. It’s all based on supply and demand. If everyone wants to sell a stock and no one is interested in buying, it’s worthless.
Sure, it’s unlikely the stock will go below $400 or $300 or some arbitrary dollar value, but to say there are “limits” to how low a stock can go is just silliness.
What a genius you are
I agree with breeze.
Can it go lower than the cash they have in the bank per share? I’m not sure, but that would seem like the actual limit to me.
The stock prices are all based on the upper 1% manipulating the stock to screw the 99. Just like the Republican Party.
The only thing driving the market higher has been a multi-year history of artificially low interest rates, a 50% increase in government debt in five years, and trillions of dollars in newly printed money. When it all comes to a head, we’ll find out just how low Apple can go.